...if the water on the ground is deep enough to come up to the air filter "hole in the fender"...

ah ok, from the opís picture it looked like the pipe was passing through the hole in the fender and adding an air filter to the end would make it considerably lower than the hole. So Iím guessing heís cutting the pipe before the hole and adding a filter behind the headlight and level with the hole, my bad

yes the filter is going in the behind the fender under the liner. It's going to be tight but I believe I can make it work. I shaved the back to the maker light and installed an LED bulb and sealed it up. BTW water is not going to be an issue for me. Looks like the pics were cropped for some reason after I uploaded them?

My $0.02 worth. My cold air intake gets air just below the turn signals. I have raced when it rained so hard I had water inside the car, you could not see the track at all and I had zero water ingestation problems. See signature picture below, this is where the rain had let up a little.

One additional thought, once the car gets moving the air does not stay in one place long enough to get really warm.

Seconded.
I use a large-ish Injen cone filter (with inverted cone) with the Injen "Hydro-shield". It would not fit in the fender well, so located it below the horns. Never had a problem with water ingestion, whether after power-washing the car or driving in pouring rain. In fact I had more problem with a (smaller) cone filter located between the headlight and the coolant tank after power-washing the car.
In my opinion there is too little room in the fender well to make proper use of a properly large cone filter.